There are new Dolphin cars from the Chinese automaker BYD at the port
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Shares of Chinese electric car makers listed in Hong Kong fell on Tuesday as fears of price wars in the sector grew.
The electric car market in China, which is the largest and most crowded in the world, is witnessing fierce competition from local players as well as giant American companies such as Tesla To win as much market share as possible through promotions and price cuts.
“While across-the-board price cuts will pressure profits and margins in the near term, this could be offset by increased demand as electric vehicles expand their appeal to a wider range of consumers,” said Yuqian Ding, head of China automotive research at HSBC. Qianhai told CNBC.
While consumer interest is improving, “wait for a better price” sentiment continues to constrain EV makers' sales volume, Ding said.
At least 30% of China's automobile market consists entirely of electric vehicles, and most of these electric vehicles come from domestic brands.
On Tuesday, most Chinese electric cars continued to face pressure. Stocks listed in Hong Kong Lee Otto It decreased by 3.9%, while New Shares fell 3.6% Exping Decreased by 1.8%. BYD Shares rose 0.4%.
Nio is scheduled to report its December quarter earnings later today.
A piece of China's electric car pie
Competition in the electric vehicle space has intensified in the country, as local automakers seek to outdo their American rival Tesla with luxury technology and competitive prices.
Tesla announced new incentives to attract consumers in China on Friday, including discounts on car insurance products and preferential financing plans for a limited time only.
Despite the price cuts announced earlier, Tesla still lost market share in China in January, especially in major cities, according to Morgan Stanley.
Li Auto has launched a new electric car called “Mega” – a multi-purpose vehicle priced at CNY559,800 (US$77,756), with deliveries scheduled to begin in March. The minibus comes equipped with a built-in refrigerator and sofa.
Li Auto said last week that it delivered 20,251 vehicles in February, an increase of 21.8% from a year ago. However, month-over-month deliveries fell by 35% from 31,165 vehicles in January.
Stellantis– Supported Jump drive It has cut prices for its new electric version of the C10 SUV by nearly 20% compared to the pre-sale price, according to the South China Morning Post.
“We have reiterated that Leapmotor prices its vehicles based on production costs,” SCMP reported, citing Leapmotor founder and CEO Zhu Jiangming.
Morgan Stanley research showed that Xpeng and Nio lost share across regions, while BYD saw gains in major cities and losses in less developed regions, where it saw increasing competition from state-owned players.
Li Auto's market share diminished in the fourth quarter of 2023, analysts at the US investment bank said, as investors continue to monitor whether there will be a boost from the new model it launched last week.
BYD is in a good position
BYD has reduced the prices of various electric car models and launched a new version of its best-selling car on Monday.
According to Reuters, the company's Yuan Plus crossover, known overseas as the Atto 3, was priced lower than its discontinued predecessor.
“BYD has an unparalleled cost structure and product innovation capability, which stems from a high degree of vertical integration and will enable the company to thrive in the ongoing EV race in China and beyond,” Bernstein analysts wrote in a note to clients.
Bernstein expects China's electric vehicle market to see continued demand growth of about 25% year-on-year while becoming increasingly competitive amid “persistent price pressures.”
In an official statement issued at the much-anticipated “two sessions” meeting in China on Tuesday, Beijing said it is making efforts to promote the new energy sector through various measures – including reducing or exempting the purchase tax for electric vehicles, and subsidizing construction and other infrastructure measures. – Contributed to “an increase in sales of new energy vehicles by 37.9% in 2023.”
According to the document, “To ensure smooth logistics flows, we have supported 10 additional cities to serve as comprehensive national freight hubs to support operations chains.”
Just last week, Chinese President Xi Jinping called for more support for the development of new energy vehicles, especially through building charging infrastructure.
– CNBC's Evelyn Cheng contributed to this story.
